NY appeals court OKs Aereo live television online service

NEW YORK (AP) — An Internet company offering inexpensive live broadcast television online doesn't violate U.S. copyright law, a divided federal appeals court ruled Monday.

The 2-to-1 ruling by the 2nd U.S. Circuit Court of Appeals cleared the way for Aereo Inc.'s expansion of a service that had been limited to New York City until this year. The company has announced plans to expand to Boston, Chicago, Philadelphia, Washington and 18 other U.S. markets. Broadcasters including Fox, ABC, CBS, NBC and others had sued, saying Aereo copies and retransmits their programs as they are first aired without permission.

The ruling came in a preliminary stage of the case in federal court in Manhattan. More evidence must be presented to a lower court judge before she issues a final decision. Other legal challenges have been filed elsewhere against a budding industry that stands to challenge the dominance of cable or satellite companies that offer their licensed programming to consumers.

The appeals court agreed the service does not appear to violate copyright law because subscribers are assigned to their own tiny antennas at Aereo's Brooklyn data center. The antennas grab free over-the-air broadcasts and Aereo streams the video to subscribers over the Internet.

The appeals court relied in part on an earlier court case in which judges found that Cablevision System Corp.'s digital video recorder did not violate copyright law by copying and storing programs for each customer's use. The majority said to rule against Aereo would conflict with its earlier decision in the Cablevision case.

In a forcefully written dissent, Judge Denny Chin said Aereo violates the Copyright Act and called the company's individual tiny antennas a "sham." He said the company's system was a "Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law."

Chin said the company is able to broadcast things like the Super Bowl live to tens of thousands of subscribers because each subscriber has an individual antenna and a unique copy of the broadcast, thus enabling it to be considered by some in the eyes of the law as a private performance rather than a public one.

"Of course, the argument makes no sense. These are very much public performances," he wrote.

Dennis Wharton, executive vice president of the National Association of Broadcasters in Washington, said the group was disappointed by the ruling.

"We agree with Judge Chin's vigorous dissent and, along with our members, will be evaluating the opinions and options going forward," he said.

Aereo CEO Chet Kanojia said he was grateful for the ruling, which he said "validates that Aereo's technology falls squarely within the law."

"We may be a small startup, but we've always believed in standing up and fighting for our consumers," Kanojia said. He added that the decision "sends a powerful message that consumer access to free-to-air broadcast television is still meaningful in this country."